Paper #227

Title:

Location of hubs in a competitive environment

Authors:

Vladimir Marianov, Daniel Serra and Charles Revelle

Date:

June 1997

Abstract:

We offer a formulation that locates hubs on a network in a competitive environment; that is, customer capture is sought, which happens whenever the location of a new hub results in a reduction of the current cost (time, distance) needed by the traffic that goes from the specified origin to the specified destination. The formulation presented here reduces the number of variables and constraints as compared to existing covering models. This model is suited for both air passenger and cargo transportation. In this model, each origin-destination flow can go through either one or two hubs, and each demand point can be assigned to more than a hub, depending on the different destinations of its traffic. Links (``spokes'' have no capacity limit. Computational experience is provided.

Keywords:

Location, hub, tabu search

JEL codes:

C61, R12, R53

Area of Research:

Microeconomics

Published in:

European Journal of Operational Research, 114, (1999), pp. 363-371

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